Business and management

E-commerce in India

Sell now, pay later

NINJUU NARANG, a middle-aged cloth manufacturer and wholesaler from Gujarat, is in a cheerful mood. Last month he sold saris worth $20,000 in just 10 days on Snapdeal.com, a Delhi-based daily-deal and e-commerce portal. Every morning he wakes up to a consolidated list of customer orders in an e-mail from Snapdeal. Later that night the consignment is dispatched in a truck which trundles along for one-and-a-half days, covering over 1,000km (about 600 miles) before reaching Snapdeal's warehouse in Gurgaon, a flourishing industrial belt in North India. From here the saris are couriered to consumers across the country. Snapdeal earns a hefty commission on such deals and Mr Narang now sells to scores of customers he has never met, a first in his family's three decades in the trade.

Selling online has not always been this easy. In 1999 K Vaitheeswaran founded Fabmart.com (now IndiaPlaza), India's first e-commerce site. Back then only a small fraction of the 3m internet users transacted online. Halting dial-up connections and text-only browsing were not cut out for navigating complex payment gateways. Few Indians held credit cards and fewer still were keen on disclosing their card details. Nowadays more than 100m surf the web. Close to 30m scour for bargains online, and the number which grows by 1.5m every month. The industry is worth around $10 billion, though travel-ticket sales alone accounted for $8.4 billion last year.

Little wonder, then, that in 2011 investors ploughed more than $450m into Indian e-commerce. Flipkart, India's largest online store by revenue has so far raised $31m since it was founded in 2007 and employs more than 5,000 people. With average daily sales of $500,000, the company aims to hit $1 billion by 2014-15. Last December Ambareesh Murty, an erstwhile e-Bay executive, used a seed fund of $5m to launch Pepperfry.com, which sells lifestyle products. In February Amazon debuted in India through Junglee.com, a product-comparison website which aggregates information from different e-commerce sites. In just two years Snapdeal's venture-capital (VC) backers have stumped up $52m. Myntra, a popular seller of fashion products, has managed to tap investors for $40m since its launch in 2007.

It is only natural that the industry should flourish. Indians are young—almost half of them are under 25—and growing richer. Its income per capita has risen by 12% between 2008 and 2011, to $1,500. The International Monetary Fund reckons it will reach $2,300 by 2016. With more money to spend, city-dwellers lap up online discounts. Nor is the trend confined to the biggest urban centres. Roughly a third of all products sold online are shipped to cities with population of 3m or less. Many of them lack supermarkets and other big retailers. The internet offers better deals and a wider variety of goods to choose from.

There are problems. “Inventory based e-commerce in India is extremely capital inefficient,” says Avnish Bajaj, boss of Matrix partners, a VC firm. According to his calculations, in India, stocking inventory for 60 to 90 days with an annual sales target of $200m requires working capital of about $40m-50m. Banks are reluctant to lend to companies with untested business models, so almost all of it is being financed by fickle equity.

Revenue models look shaky. To secure repeat business, most portals offer incredibly low prices, payment by cash on delivery and, nearly always, free shipping. Consumers love it but companies are scratching around for ways to shed the operational burden. Ironically, the very things that have propelled e-commerce in India could lead to its downfall. When Mahesh Murthy, the boss of Pinstorm, a digital marketing firm, and investor in a few e-commerce companies, purchased a mobile phone online recently, he discovered two invoices in the parcel: one for 28,000 rupees ($530), which is what he paid, and another for 30,500 rupees, which is what the seller apparently paid to his supplier. Such price competition takes its toll. One firm, taggle.com, shut up shop in December citing its unwillingness to "burn a lot of investor money" to outlast rivals.

Companies that do best have diversified and focused on customer support. Last month Flipkart struck deals with record labels and introduced a digital-music store which offers songs in over 55 languages. A dedicated customer-service team trawls social networks and consumer forums to address complaints. The company only offers free shipping for purchases exceeding 200 rupees, something Western online sellers do routinely. It was also the first to introduce a 30-day replacement guarantee on all products. “We don't compete on price,” says Binny Bansal, the company's co-founder.

Competition is fierce, but there are already signs of consolidation. In February Flipkart bought Letsbuy, a rival firm, for $20m. On April 3rd Snapdeal acquired Esportsbuy.com, an online retailer of sports and fitness equipment, reportedly for between $10m and $15m. There is certainly room for growth. E-commerce accounts for just 0.12% of all retail sales in India, compared with over 4% in China and America. But expect growing pains. Even Flipkart, arguably the most successful online retailer, has yet to turn a profit.

Correction: We originally said that Snapdeal is based in Bangalore. Its headquarters are in fact in Delhi. Apologies.

As an NRI wanting to use Flipkart, I've had too many troubles. They used to allow UK debit cards via a circuitous route but then decided to stop it. So unless I get credit card (which I can't because I'm a student), I cannot gift anyone in India anything through Flipkart.

I think that plenty of options, cheaper prices, COD model, free shipment and replacement policy have played a vital role in boosting Indian E-commerce sector. I recently started online shopping from Craffts.com, an Indo-Western lifestyle portal and found it far better than offline shopping.

I see the delivery guy delivering from various ecom venders such as flipkart, bookadda, etc. almost on a daily basis. No Fedex, UPS or anybody else, just a guy on a moped/bike with a large bag full of goodies to distribute (almost an Indian version of Santa Claus!)

Cash on Delivery is a unique concept and a uniquely successful concept too. Many people in India, especially in the smaller towns and cities, either do not have credit cards and if they do they are still not very comfortable with disclosing their details online what with many websites taking forever to process transactions and some not very trustworthy ones. COD is a godsend for them.

While India is expected to grow and 'boom' over the foreseeable future, it will also herald a more than corresponding growth in traffic, crowd and congestion making shopping online the only viable option after a few years.

The last 2 years has really shaken up the sales eco-system here in India.

We have adapted Western online models with Indian culture and perceptions and the resultant commerce models are simply brilliant. Your example of the sari dealer is awesome and that reflects the change from traditional broker driven retailing and delivery to aggregated selling models.

While the competition is fierce, eventually big players like flipkart will find enough ways to succeed. The online-brickmortar hybrid model will work well but the online-warehouse-seller model will work wonders in a space crunched country like ours. Already people are buying all kind of stuff, never even imagined - shoes, spectacles, shirts.. All have been traditionally bought only after a touch or a feel. Today, its different. The sites have made it so easy for you to measure precisely what you need and search and buy and with discounts and less waste of time sitting at the shop.

Things are only about to explode with the 3G and 4G proliferation. So, for all sitting on the fringes abroad, have fun watching us go bonkers!

According to a few experts here, online retailing is the next big thing happening in India after the phenomenal success stories of the IT and the automobile sectors.
Though it has to be said, that despite the big numbers, it is still very much a field that is grappling with fundamental issues with many of the rules of the game of online shopping still be be clearly laid donw.

All the same, the beginning has been made and by all accounts is good.

The sudden change in e-commerce industry is quite fascinating. India is considered a huge market with more than 100 million webs users already. The best part is consumers are getting to see large variety of products at reasonable cost.

Recently I made a purchase of Men accessories from a brand called SARSO. Simply superb shoes collection they are offering at such a great deal.. Such emerging brands show how India has managed to get INR 51,000 cr current size in e-commerce industry!!

Many new company is entering in eCommerce now a days. We all know, India is growing market and no one want to lose race. For any eCommerce company there should be customer centric approach. Lot of new company started customer engagement program in India. Let’s see how markets will behave.

E-commerce has spread all over the world, and people can benefit from e-commerce in many ways. It can allow people take part in B2B, B2C or C2C e-commerce via a mobile phone, PDA and handheld computers and other wireless terminal. It takes the most use of the Internet, digital communication technology, short-range communication technology, and other information processing technology, to make people doing the various business activities whenever the want to do, so that people can achieve shopping transactions even they are outside the market. And people can also benefit from online electronic payment as well as a variety of trading activities, business activities, financial activities and related service activities and so on. India, which has a large number of populations, can escape from a crowded market place by shopping online. However, there are two problems need to focus.
The first one is the bandwidth problem. Because the bandwidth demand increases, the service supporter may face the problem of bandwidth. Standards such as IEEE802.11, LTE, and Bluetooth use the same frequency. It may cause interference. In 15th November, the Wifi was used the same frequency with some cities subway train signal frequency, making the city subway train signal disturbance and stop work. It is possible that when there are too many users online, the bandwidth may stop work.
The second one is the security problem. Security is the most important factors in e-commerce. Most the wireless communication protocols did not offer password of the transmission. In security models of protocols that do have security encryption (such as WAP), there have been indentified transmission security weaknesses in current protocols. Following section describes security issues in wireless transmission.
In general, when people enjoy the benefit of the e-commerce, please do not forget there are also some problems need to pay attention.

There are a lot of shopping carts developed by e-commerce giants.They provide the wide range of products for the customers. Ecommerce is growing rapidly day by day.Its a never ending business since people will buy products online more and more in the near future.Groupon Clone

Though there is a fierece competition, but what needs to be look out at is how efficient one is manage to keep inventory and work on supply chain model. Few years ago, Big Bazaar grow very big and its very growth become a curse for it, as it was unable to manage inventory and supply chain. No one can become "Amazon" in India.www.ofororange.com -- a baby care product ecommerce company

I think the biggest reason why e-commerce will stay in India is cause of the bad infrastructure in India. People can't be bothered to go to a supermarket or even a hypermarket which would be an hour or 2 hours drive from their home. Instead, they have finally decided to stay at home and order. Problem is, that with all the current data, the infrastructure ain't gonna improve anytime soon, or for another few years or so. And Indians aren't gonna drive 2 hours just to.. buy something or the other. Except, a car.